Lawmakers passed the budget with 62 votes in favour and 55 against.

The vote averted an automatic government collapse and snap election that would have followed failure to pass the budget by March's end, under Israeli law.

The proposed total expenditure budget for 2026 amounts to approximately 850 billion Israeli shekels (NIS) or $270 billion.

"As part of the updated budget, and in light of Operation 'Roaring Lion', more than NIS 30 billion (about $10 billion) has been added to the ministry of defence budget, bringing it to over NIS 142 billion," the parliament said in a statement, using the name Israel has given to the war with Iran.

Israel's defence spending has steadily increased since the war in Gaza broke out following Hamas's attack on Israel on October 7, 2023.

In addition to fighting the new war against Iran with its ally the United States since February 28, Israel is also battling Iran-backed Islamist movement Hezbollah in southern Lebanon.

Ahead of the vote, lawmakers debated the budget proposals late on Sunday. Far-right Finance Minister Bezalel Smotrich called it a "historic turning point" for Israel.

"We have the capacity to reshape the Middle East. This budget positions the nation to win," Smotrich said.

"We are passing this budget under a right-wing government committed to fulfilling its term and achieving its missions in security, the economy and judicial reform.

"This term will be remembered as a historic turning point for the State of Israel, redefining both our security approach and our economy," Smotrich added.

He also praised Israel's macroeconomic performance as "astonishing" despite the war.

- 'Greatest theft' -

Main opposition leader Yair Lapid described it as "the greatest theft in the state's history".

"Six billion shekels are coalition funds that this government is allocating to itself -- to corruption and draft evasion," Lapid said.

"The Israeli public is not foolish. It understands that this budget is a windfall for the corrupt and for those who evade responsibility -- celebrating at our expense," he added.

Earlier this week, Lapid had lashed out at the government over its handling of the war in Iran, specifically criticising delays in legislation that would allow ultra-Orthodox Jews, who are largely exempt from military service, to be conscripted.

The law aligns with the demands of a broad majority of Israelis, who are increasingly opposed to the ultra-Orthodox exemptions.

Prime Minister Benjamin Netanyahu, who relies on his ultra-Orthodox party allies to maintain power, has delayed the legislation's adoption.

The surge in defence spending in the budget will lead to a three-percent cut across all other ministries, which was also strongly criticised by Lapid.

But Netanyahu's government, dependent on the support of its ultra-Orthodox and settler allies for its survival, has approved a significant increase in funds earmarked exclusively for them.

Ultra-Orthodox parties will receive more than $750 million in additional funds for private schools they control.

Despite the sweeping cuts imposed on all civilian budgets, funding for settlements has remained unchanged, according to a report by the anti-settlement group Peace Now.

The Peace Now report denounced the measure as "daylight robbery of public funds" for the benefit of a small group within the government's base.

On December 4, the government approved spending more than $875 million over five years to develop settlements in the occupied West Bank, which are illegal under international law.